Andrew Leigh

E&OE TRANSCRIPT 

TV INTERVIEW

SKY AM AGENDA

MONDAY, 8 AUGUST 2016

SUBJECT/S: Banking Royal Commission; Chinese bids for Ausgrid

KIERAN GILBERT: Andrew Leigh thanks very much for your time. The Treasurer says that the ongoing call by Labor for a Royal Commission is a populist whinge. He has also raised concerns that this could have unforeseen certain impacts in terms of our financial system. Are you cognoscente of the international reputation that we might be gaining from your calls for a Royal Commission here?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran, like those Japanese soldiers who fought on past the end of World War II, I suspect Scott Morrison will be the last man fighting against a Royal Commission into the banks. The fact is, Australians want this. They've seen too many scandals, Storm, Trio, Westpoint and the rest. They've seen too many instances in which Australian banks have fallen short of the high standards we set for them. And that's why a Royal Commission is appropriate. Not just to look at particular breaches and have them aired, but also to look systematically - in a way that the current regulators can't – at whether we need to update our regulatory settings. 

GILBERT: Cabinet Minister Kelly O'Dwyer was at the IMF meeting earlier in the year. Apparently according to the Treasurer, international figures wondering whether there is an underlying problem with our system because of Labor's calls for a Royal Commission, is that an unforeseen impact of your call for a Royal Commission here?

LEIGH: Not at all. The fact is, we shouldn't be scared off making sure that our banks are as good as they can be. A Royal Commission allows us to look at the systematic issues. Vertical integration does create new challenges for regulators. The fact is our banks go to the international capital markets every year for half a trillion dollars of additional funding. And they have to be first rate banks in order to secure that international funding at reasonable prices. These scandals threaten that, and that's why a Royal Commission will hopefully see our banks emerge stronger not weaker.

GILBERT: But the House of Representatives economics committee, that's a good step forward isn't it in terms of scrutiny of the banks? Labor will surely get involved in that and try and use that as the catalyst for answers not just in terms of rates but the areas you're talking about as well?

LEIGH: Well if there's a Parliamentary committee taking place we will obviously participate. Let's not pretend that inviting CEOs to Canberra for a sit down with a committee and probably be led by the Member for Banks is likely to actually have any real level of scrutiny. I'm not even sure which bank CEOs are coming down, have you got a sense of that?

GILBERT: They've all agreed to do it. 

LEIGH: All of them? There's a lot  - 

GILBERT: All the major ones.

LEIGH: Oh just the top four?

GILBERT: The top four have agreed to it.

LEIGH: So that means we don't get any scrutiny for any banks outside the top four?

GILBERT: Isn't it up to the committee members including Labor to request those?

LEIGH: Well I guess the reason I'm making that point is that it's not clear that you would be able to provide scrutiny across the banking sector in a format like that. If you've got the top four then that's do-able but if you want further scrutiny than that that's why you need something like a Royal Commission.

GILBERT: But do you need a Royal Commission? As one Liberal Frontbencher put it last week, to show you that the banks at times can be greedy?

LEIGH: It's not just greed, Kieran. It's also thinking about the systematic issues. People ought to have great confidence that their banks aren't going to be steering them into unwise financial products. We've had the scandals around the provision of financial advice around provision of insurance. In fact, it's the vertically integrated markets which have caused some of these challenges that's why we need to make sure that Australia's regulators are up to the task. 

GILBERT: But do we need an expensive Royal Commission when we've got the parliamentary infrastructure through members of Parliament hold these banks to account. I thought Labor would embrace this approach?

LEIGH: What's expensive is not having a banking system that works well. Our banking system needs to provide credit right across the economy. If our banking system isn't working optimally then small and medium sized businesses aren't able to get the credit they need in order to grow.

GILBERT: So do you believe there are some underlying flaws in the system or do you think that it is a health financial system that we have in this country right now?

LEIGH: Internationally, our banks are extraordinarily well rated. You'd expect of a country our size we'd have top-200 banks. In fact we've got top-20 banks in terms of the way in which the globe sees them. But we only maintain that position if they're scandal-free and I'm afraid that hasn't been the case in recent years. Australians, with the exception of Scott Morrison, are angry at the banks’ failure to pass on last week's RBA rate cut. Simply calling them in for a little cosy chat in Canberra isn't going to cut it.

GILBERT: The Treasurer has confirmed on another matter that national security is his primary concern when looking at Chinese bids for Ausgrid which is the NSW power distribution network. What's your view on this, is he handling it appropriately? 

LEIGH: I haven't seen the documents the Treasurer is privy to. But clearly national security needs to be in consideration. We do know that Australia has benefited from foreign investment right across the economy but the benefits of foreign investment also need to be balanced against any challenges to our security. 

GILBERT: And the other element here is between the Liberal Party between the state level and the federal level. Mike Baird campaigned on a multibillion dollar infrastructure spend off the back of the sale of this particular network.

LEIGH: Well that's obviously going to be an issue for Mike Baird. Scott Morrison needs to make the right call for Australia – not for the NSW Liberal Party.

GILBERT: And in terms of the national security implications here of course this decision by FIRB, the Foreign Investment Review Board, comes in the context of very clear tensions in our region between not just us and China but the region and China?

LEIGH: Yes absolutely. I've been disappointed in the way in which the Chinese have responded to the recent United Nations Convention on the Law of the Sea tribunal ruling. It's really important that all countries abide by international rules based order. Making sure that China is playing within the global rules is vital to ensuring their prosperous and secure rise.

GILBERT: Just finally, this relationship though with China between and Australia and Beijing but also the United States is different to previous international tensions because of the fact that there are so economic in terms of trade and other matters are so intertwined?

LEIGH: You're absolutely right Kieran. We've benefited overwhelmingly from the rise of China. Australian living standards are considerably higher than they would have been and of course hundreds of millions of Chinese have been pulled out of poverty. We also need to manage that tension as a superpower regains the place that it had in centuries past. Getting that balance right is a huge challenge for Australia.

GILBERT: Shadow Assistant Treasurer, Andrew Leigh I appreciate your time.

LEIGH: Thank you, Kieran.

ENDS